Apple seen sustaining 30 percent yearly iPod growth

"Since the iPod was introduced in Oct. 2001 it has been the primary driver of the company's growth engine," analyst Gene Munster wrote in a note to clients. "We are modeling for the year-over-year growth to stabilize at [approximately] 20 percent, but believe 30 percent growth is achievable and will provide upside to our estimates."

While noting that Apple has sold 68 million iPods in the past five years (of which 39 million were sold in the last year), the analyst maintained his belief that a "significant addressable market" remains.

"Although we consider it an overestimation, if we use the mobile phone market as a proxy for the Pod's addressable market, then the iPod's market penetration is [currently] about 27.5 percent," he said.

Over the next 6 months, Munster expects Apple's forthcoming iPhone and iTV set-top media device to account for two more significant drivers to the company's growth engine.

"The mobile phone market represents a large potential supplement to iPod sales," he told clients. "Music-enabled phones are gaining popularity, but Apple will be the first to offer a unified solution with the design and usability of the iPod."

Meanwhile, Munster sees iTV adding a fourth driver (behind Macs, iPods, and iPhone) to the growth engine: the living room, providing integrated operability between iTunes media content and televisions.

"Both the iPhone and the iTV represent initiatives that could add iPod-like growth to the Apple story," he said.

Munster, who maintains an "Outperform" rating and $99 price target on shares of Apple, said the iPhone and iTV could add 15 percent to the Wall Street's 2007 calendar year estimates for the company.